As the year is racing to an end, it is time to discuss key business and tax changes based on the 2025-OBBA.
Here’s a rundown of essential changes (or confirmations) that affect how businesses report, deduct, or strategize:
- 100% Bonus Depreciation Restored (for qualifying assets): Businesses can immediately expense the full cost of qualified assets placed in service *after* January 19, 2025, eliminating the scheduled phase-down. Detailed asset list (date placed in service, cost, business use percentage), supporting invoices, tagging for classification
- Expansion of Section 179 Deduction: The threshold for expensing “qualified depreciable property” is increased (with higher phase-out limits). Track qualifying purchases, usage percentages, and ensure eligibility under new threshold limits
- Pass-Through / QBI Deduction Made Permanent / Expanded: The 20% (currently 23%) qualified business income deduction (under §199A) is now permanent and expanded, with some easing of limitations for higher-income taxpayers. Good QBI calculations, allocate business vs. non-business income, document wage/capital basis in business.
- Business Interest Deductibility & International Rules: The law restores more favorable rules for interest deduction, better isolating foreign income so that domestic interest is less restricted. Also, for businesses with foreign operations, changes tweak how interest, foreign tax credits, GILTI / FDII rules work. Interest expense schedules, debt allocations, foreign income schedules, and supporting documentation of interest tracing
- Changes to BEAT (Base Erosion & Anti-Abuse Tax): The BEAT rate is increased from 10% to 10.5% for tax years beginning after December 31, 2025. For large multinationals or cross-border entities, track base erosion payments, cost shifting, etc.
- Changes in Clean Energy / Incentive Credits: Some clean energy / green incentives are curtailed or modified; the law “terminates a large number of clean energy tax incentives.” If you’ve been planning or using green credits, inventory what remains, deadlines, carryovers, and compatibility with depreciation rules
- QSBS (Qualified Small Business Stock) Enhancements: The law raises the gross asset ceiling for eligibility and increases the per-issuer flat cap of capital gain *exclusion* for QSBS. For eligible shareholders, preserve documentation (issue date, adjusted basis, holding period, etc.)
- SALT Cap Bump for Pass-Throughs / Owners : While SALT (state and local tax) caps mostly affect individual owners, the bump (from $10,000 to $40,000 for 2025–2029) may benefit owners of pass-throughs when they report their share. State / local tax payments records, look-through of pass-through state taxes, and documentation for owner-level
- Permanent Extension of Many TCJA Provisions: Many of the beneficial items (tax brackets, lower rates, etc.) that were going to sunset are now made permanent, removing a looming “tax cliff” planning risk. While not something you “document,” it means your longer-range planning is more stable under the new law
What to Gather / Plan (Based on These Changes)
Now that you know what’s changed, here’s what to pull together *now*:
1. Asset / CapEx schedule
* Detailed list of all new assets you placed (or plan to place) in service
* Cost, date, business-use percentage, description
* Useful life classes and classification documentation
2. Debt / Interest allocations
* All loan agreements, interest rates, and amortization
* Separation of domestic vs foreign debt
* Interest tracing/allocation worksheets
3. QBI / pass-through allocations
* Business income, loss, deductions, wages, capital basis per owner
* Supporting documents for allocations/formulas
4. Foreign operations / cross-border tax schedules
* Foreign tax paid, income by country
* GILTI / FDII / foreign tax credit schedules
* Documentation of how interest/expenses are allocated
5. Clean energy/incentive / credit documentation
* Relevant certifications, project timelines, carry-forward credits
* Supporting workpapers for compliance with modified rules
6. QSBS / shareholder/capital events records
* Stock issuance documents, capitalization, basis bridging, shareholder lists
* Dates, adjustments, elections
7. State / local & SALT payments
* Records of all state income tax, property tax, and local taxes paid
* Pass-through state taxes paid on behalf of owners
8. Historical and projected income/tax estimates
* Create pro forma tax projections under the old vs. the new law to see where your sweet spots are
* Sensitivity testing around key thresholds (interest limits, QBI limits, etc.)
9. Engage your CPA / tax advisor early
* Run mid-year or 3rd/4th quarter “look ahead” projections
* Test various scenarios (accelerate vs defer, debt vs equity, etc.)
Final Thoughts
The 2025 law gives businesses both complexity *and* opportunity. Some doors opened (bonus depreciation, QSBS expansion, stronger QBI rules), others changed shape (interest rules, incentive credits).
By assembling the correct data *now*, you give us (your tax team) the chance not just to comply — but to optimize. You don’t want to discover in March that an opportunity slipped through your fingers because documentation was missing or planning was reactive.
So — let’s dust off those spreadsheets, update your asset ledger, and give the new law a test drive. I’m happy to help you run the scenarios, refine the moves, and make sure 2026’s tax return is one you look back on with a smile.
